Tip 22-2012: Advantages of Short Sale vs. Foreclosure
Is
it better for the owner of an upside down property to participate in a
short sale, or to simply walk away with the lender ultimately having to
foreclose? The answer in almost all circumstances is "Do a Short Sale."
The advantages of a Short Sale are:
- A short sale has less of a negative effect on the Borrower's credit score than a foreclosure.
- A foreclosure will affect the Borrower's ability to buy another house longer than a short sale.
- With
a short sale, the Borrower should be able to remain in the house until
the lender accepts the short sale (instead of moving out and possibly
paying rent elsewhere.)
- In a short sale, more and more lenders are allowing the Seller a relocation allowance.
- With
a short sale, any deficiency can usually be negotiated away as part of
the approval. With a foreclosure, the lender will usually create a
deficiency by buying the property for less than the debt owed.
- Any
Second Deed of Trust will not be paid anything with a foreclosure,
while with a short sale, the second lender will receive some money and
will probably negotiate a waiver of any deficiency.
- Finally, a
short sale is simply better for the real estate community, and
especially for the specific neighborhood than a foreclosure. Any
foreclosure resulting in an empty boarded up house is never good for
anyone.
Although we know short sales can be very difficult to complete, the advantages far outweigh a foreclosure.
Contact me at 434-951-0858 or Tucker@TGBLaw.com if you have questions, or visit our blog below for previous tips. Thank you for allowing us to send you this email.
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William D. Tucker, III
Charlottesville, VA 434-973-7474 | Lake Monticello (Palmyra, VA) 434-589-3636
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